Solaria Tumbles as Goldman Cuts Share-Price Target

By Gareth Gore

Aug. 29 (Bloomberg) -- Solaria Energia y Medio Ambiente SA dropped to a record low in Madrid trading after Goldman Sachs Group Inc. cut its price estimate on the Spanish maker of solar panels, citing ``weak'' second-quarter earnings.

Solaria retreated as much as 58 cents, or 12 percent, to 4.21 euros, the lowest since the shares started trading in June last year. The stock was at 4.44 euros as of 12:17 p.m. local time, valuing the Puertollano-based company at 449.1 million euros ($662 million).

The results were ``weak'' because of a drop in production of photovoltaic panels to 11.5 megawatts in the quarter from 20 megawatts in the previous three months, London-based analyst Mariano Alarco said today in a note to clients. Goldman cut its price estimate on Solaria to 5.50 euros from 6 euros.

Net income jumped to 27.2 million euros from 8.4 million euros a year earlier, Solaria said yesterday in a regulatory filing. Sales more than tripled to 159.8 million euros from 45.2 million euros.

Today's decline takes Solaria's slump to 79 percent this year. That compares with a 23 percent drop in the IBEX 35 Index.

``Two of Solaria's key suppliers failed to deliver contracted quantities of cells in the quarter, a problem that is likely to persist in the third quarter and affect profitability through 2008,'' Goldman's Alarco said in the note.

Piper Jaffray reduced its recommendation on Solaria to ``neutral'' from ``buy'' and cut its price target to 5 euros from 10 euros, according to a note e-mailed to clients today.

To contact the reporter on this story: Gareth Gore in Madrid ggore1@bloomberg.net